Stock Market News

Sunday newspaper round-up: Essar, Barclays, Rolls-Royce

The billionaire Indian Ruia family will this week offer to buy back the part of Essar Energy it does not own for less than a fifth of what investors paid for shares four years ago, the Sunday Times said. The Ruias are working on the final touches of an offer that will be a blow to the London market's reputation. Essar floated in 2010 for 420p a share but the family will offer no more than 75p. The company said on Friday the family's holding company, which owns 75% of Essar, was considering an offer at a "modest premium" to the shares' 60p price.

Barclays has started the search for a new chairman to replace Sir David Walker, the Sunday Times reported. Walker was brought in to steady the bank after the Libor scandal and is likely to stay until next summer but the bank has appointed headhunters. The search started after Barclays displeased big shareholders by increasing total bonuses for 2013 10% to £2.4bn. Large investors are holding off from threatening a confrontation at the next shareholders' meeting because they want to hear the reasons for the jump in bonus payments. Barclays says they are needed to keep top people.

Rolls-Royce shareholders want answers about how the company accounts for contracts to service aircraft engines, the Sunday Times reported. Rolls-Royce said in last week's results statement that the accounting regulator had told it to restate 2013's figures. Adjusting how the company accounts for TotalCare maintenance deals on its engines took £39m off last year's profits. The Financial Reporting Council wants Rolls-Royce to spread the maintenance payments over a project's life instead of booking them upfront. Investors are still taking stock of the company's announcement that revenue will be flat this year.

Boohoo.com is likely to announce a decision to list shares on the stock exchange in the next two weeks and to float by the end of March, the Sunday Times said. The transaction will value the online clothes retailer at about £500m. It made £3.2m of profit on £67m of sales in the year to February 2013. Boohoo.com sees itself as a smaller version of Asos, the stock market darling. Boohoo sells its own clothes whereas Asos focuses on selling top brands. Retailers with strong online operations are tipped to be the most successful of the many London floats in the pipeline this year.

Inflation is set to fall below the Bank of England's (BoE) 2% target for the first time in more than four years, the Sunday Telegraph and Sunday Times reported. Economists expect the stronger pound, lower commodity prices and falling prices on the high street to have sent consumer price growth to 1.9% in January from 2% in December. The fall will ease pressure on household spending.

Centrica has approached Iain Conn, who runs BP's refining arm, to replace Chief Executive Sam Laidlaw, who plans to step down from the British Gas owner after nearly eight years, the Sunday Times said. The internal favourite for the job is Chris Weston, who heads British Gas and previously headed Centrica's US arm. Whoever succeeds Laidlaw will face unprecedented political pressure over the cost of household energy.

Ladbrokes has called a stop to its programme of opening more stores after anger about the number of bookies on high streets, the Sunday Telegraph reported. Ladbrokes will tell analysts at its results this month that it expects to close more stores than it opens next year, cutting annual capital expenditure to £60m from £100m. Campaigners have attacked the proliferation of bookmakers in poor parts of Britain.

Ocado plans to expand into kitchen and barbecue equipment in its second push to cut its reliance on groceries, the Sunday Times said. The online retailer could launch the range next year to add to its pets website, Fetch. Chief Executive Tim Steiner said at Ocado's recent results that plans were afoot to add more specialist services.

Poundland is expected to announce plans for a £700m flotation this week, kicking off a list of retailers looking to list shares in London, according to the Sunday Telegraph. The discount retailer, chaired by former Tesco executive Andy Higginson, will seek to raise between £300m and £400m to expand in the UK and Europe. Pets at Home is also set to announce its flotation plans.

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